Overview
- On Wednesday RBA Assistant Governor Christopher Kent told a Reuters Next event that the three rate rises earlier this year are transmitting into the economy and helping to slow demand.
- The central bank left the cash rate at 4.35 percent and Kent said that level sits near the top of the RBA’s central estimates of the neutral rate while those estimates remain highly uncertain.
- Kent said housing activity has softened noticeably and linked part of the slowdown to federal budget tax changes and higher borrowing costs, which is helping to tighten financial conditions.
- He warned that substantial data‑centre and AI investment has supported aggregate demand recently and that this spending by itself means policy rates may need to be higher in the short run.
- Kent also highlighted weak productivity and what he called very generous equity valuations as risks that complicate the inflation outlook and leave the board open to further hikes if upside risks materialise.